A spending variance is calculated by comparing the: Multiple Choice The difference between the acutal amount of the cost and how much a cost should have been, given the actual level of activity.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Which of these four options is the correct answer to the question?
Solution:
Spending variance is calculated by comparing flexible budget to the actual results.
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